Financial Guidance to Help Your Business Succeed

If you’re self-employed or your employer’s benefits package is a little skimpy, consider buying your own disability income insurance policy. Should you become ill or injured and are unable to work, such coverage can mean the difference between a comfortable convalescence and a financial crisis.

Your policy should pay out at least 60% to 70% of your income. Determine what you need by adding up monthly expenses such as mortgage and insurance payments, property taxes, groceries, home maintenance, utilities, and revolving debt payments. Keep in mind that, if you aren’t working, you no longer have commuting and professional clothing expenses.

Look for a policy that defines “disability” as broadly as possible. And it should specify that benefits are paid out if you can’t work in your “own” rather than “any” occupation. Otherwise you may be forced to accept a lower-paying job. You can reduce the cost of coverage by opting for a longer waiting period before payouts would begin.

Aside from greater peace of mind, disability income insurance provides another advantage. Generally, a policy paid for with after-tax dollars provides tax-free benefits.